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If you're struggling to pay off your tax debts, or there's a valid reason to cancel your tax penalties, the Internal Revenue Service (IRS) may be able to help by offering you a tax settlement.
An IRS tax settlement allows you to either settle a tax debt for less than the amount owed, or devise a new plan to repay your taxes over a period of time.
Whether or not you qualify for an IRS tax settlement, however, depends on your financial situation.
Furthermore, there are different types of IRS tax settlements, each which benefits taxpayers according to their particular financial situation.
An IRS tax settlement allows you to either settle a tax debt for less than the amount owed, or devise a new plan to repay your taxes over a period of time.
IRS Fresh Start Program Get help with IRS Fresh Start program
If you're worried about qualifying for an IRS tax settlement, there's some good news. The IRS has introduced its Fresh Start program to help taxpayers owing $50,000 or less, qualify for an installment agreement.
The program has also expanded access to OIC settlements to larger groups of taxpayers.
Additionally, the Fresh Start program has extended the time (up to 72 months) in which taxpayers must repay their balance. Furthermore, the program has increased the amount taxpayers can owe before the IRS will file a Notice of Federal Tax Lien.
Applying for an IRS Tax Settlement Get help with Applying for an IRS tax settlement
When applying for an IRS tax settlement, taxpayers need to find the type of settlement they would best benefit from. Taxpayers then submit a form to the IRS for review. Alternatively, you can get a tax professional to do this for you.
Different Types of IRS Tax Settlements Get help with an IRS tax settlement
1. Offer in Compromise (OIC)
An offer in compromise (OIC) is an agreement between the taxpayer and the IRS to settle the taxpayers' tax liabilities for a lesser amount than the amount owed.
To qualify for an OIC settlement, taxpayers must make an offer to the IRS that is equal to or greater than the most they could collect from you without enforcing financial hardship.
Taxpayers must also be current with all filing and payment requirements in order to qualify.
2. First-Time Penalty Abatement (FTA)
A first-time penalty abatement (FTA) is an administrative waiver that abolishes all or part of any tax penalties incurred and any interest owed on those penalties.
In order to qualify for an FTA settlement, the taxpayer must meet the filing and payment compliance criteria and must have had no penalties (bar estimated tax penalties) for the last three years.
3. Partial Payment Installment Agreement (PPIA)
A partial payment installment agreement (PPIA) is a payment plan between you and the IRS whereby you repay your taxes, without repaying the full debt owed, over a certain period of time. The lowest repayment plan is $25 per month. To qualify for a PPIA settlement, taxpayers must provide complete and accurate financial information for review.
Do you qualify for IRS Fresh Start or Other Settlement?
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Choosing the right option...
Before deciding which option is best for you, make sure all tax filing and payment requirements are current and in order. Additionally, if you're unsure about which IRS tax settlement best suits your financial situation, seek the advice of a tax professional with relevant experience.
If you owe back taxes to the IRS and would like to get a free assessment of your tax relief options (including IRS Fresh Start) you may request a free tax resolution review at no obligation at www.TaxReliefCenter.org.
